Will Starbucks (SBUX) Stock be Affected by La Boulange Store Closures?

NEW YORK (TheStreet) -- On Tuesday Starbucks (SBUX) announced that it will close the 23 locations of its La Boulange pastry chain by the end of this September as it works to achieve long term growth targets.

"Based on our ongoing evaluation, Starbucks has determined La Boulange stores are not sustainable for the company's long term growth," the coffeehouse chain said in a statement. Starbucks noted that it will continue to sell the brand's food in its stores.

Shares of Starbucks are up by 0.52% to $53.24 at the start of trading on Wednesday morning.

The company noted that in its most recent quarter (Q2, 2015) food delivered a 16% year-over-year growth and contributed two points to the comp growth with every daypart platform and region adding to the rise.

Separately, TheStreet Ratings team rates STARBUCKS CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate STARBUCKS CORP (SBUX) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and notable return on equity. We feel its strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 7.4%. Since the same quarter one year prior, revenues rose by 17.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 40.34% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • STARBUCKS CORP has improved earnings per share by 17.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, STARBUCKS CORP turned its bottom line around by earning $1.36 versus -$0.01 in the prior year. This year, the market expects an improvement in earnings ($1.57 versus $1.36).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 15.9% when compared to the same quarter one year prior, going from $426.90 million to $494.90 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, STARBUCKS CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: SBUX Ratings Report

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